HomeMy WebLinkAboutMarch 31, 2015 City Council Workshop
Rahr Corporation Expansion – Economic Impact
______________________________________________________________________________
As requested, economic impact estimates have been compiled for the Rahr Corp expansion in
1
Shakopee. This analysis enumerates the total (direct, indirect and induced) economic impact
on the Minneapolis-St. Paul metropolitan area.
There are two pieces to thisimpact estimate. The construction phase is a one-time impact that
creates economic activity during the building process, but then goes away once building is
complete. The other piece is the operations phase which has an ongoing impact, although the
estimate here examines only one year of operations. If the company maintains the level of
business operations as projected, the operations phase impact continues into future years.
Summary
The results indicate that for every 1 job created at the Rahr Corporation facility, another
6.5 jobs are created elsewhere in the metro economy -mainly in wholesale trade and
agricultural-related activities that support the malting process.
Due to the construction and new operations phases, the project is estimated to
generate over $35.5 million in new wages.
Thenew operationsjobs will generatean estimated$1,900per full time job in new tax
revenue for the state. Approximately $690 of that is estimated to be new local tax
revenue that flows into the local economy via employees purchasing local goods,
potential new residents or government transfers.
The wages of the new direct jobs will average $41,700 for full time work, while the
indirect and induced jobs will average upwards of $40,000.
1
In what is often called either a ripple effect or multiplier effect, increased economic activity triggers additional spending. The total economic
impact of the economic activity is the sum of three effects: The direct effect (the change in activity that stimulates other activity, in this case
construction or an increase in employment), the indirect effect (resulting from industries purchasing from other industries due to increased
demand) and induced effects (resulting from the expenditure of new household income generated by the direct and indirect effects).
Project Overview
Construction Phase: Construction and equipment-related costs for the project areestimated
to be $36.6 million, with $409.5k in public infrastructure.
Operations Phase: When construction is complete, the companyestimatesthey will employ
28 new full time workers at an average wage of $20.08/hr (the project also provides benefits).
Economic Impact of the Rahr Corp Facility Expansion
OperationsConstruction
20152015
Employment (Direct)28271
Employment (Indirect, Induced)209242
Wages and Salaries (Direct, $thousands)$1,868.9$15,859.2
Wages and Salaries (Indirect, Induced, $thousands)$8,465.8$9,368.4
GDP (Direct, $thousands)$7,114.7$24,266.6
GDP (Indirect, Induced, $thousands)$18,379.0$21,255.5
Estimated State Tax Revenue Generated by
Employees ($thousands)
$454.7$1,110.0
Dollars are not adjusted for inflation. This analysis excludes changes in government spending from reduced revenue collections, and
assumes that workers will either be (a) moving in from out of state and living in newly built housing or (b) are currently unemployed, buy no
taxable goods, and live in untaxed property.
Source: Analysis conducted with IMPLAN 3.0; 2013 Tax Incidence Study, Minnesota Department of Revenue.
Prepared by: Research & Analysis, Minneapolis Saint Paul Regional Economic Development Partnership (GREATER MSP). Analysis dated:
Feb 9, 2015.
S
T
S
T
T
O
C
S
S
T
S
R
A
G
P
A
S
T
S
Y
A
W
M
U
H
S
S
T
S
E
C
R
E
I
P
N
T
S
Y
A
L
C
CITY OF SHAKOPEE, MINNESOTA
RESOLUTION NO. 7567
RESOLUTION APPROVING CONTRACT FOR PRIVATE
DEVELOPMENT WITH THE ECONOMIC DEVELOPMENT
AUTHORITY FOR THE CITY OF SHAKOPEE AND RAHR
CORPORATION, INCLUDING ABUSINESS SUBSIDY
AGREEMENT
WHEREAS, the City of Shakopee, Minnesota(the “City”) has previously established its Minnesota
River Valley Housing and Redevelopment Project No. 1 (the “Project”) pursuant to Minnesota Statutes,
Section 469.001 to 469.047, as amended(the “HRA Act”); and
WHEREAS, within theProject the City has created certain tax increment financing districts
pursuant to Minnesota Statutes, Sections 469.174 to 469.1794, as amended(the “TIF Act”); and
WHEREAS, the Project is now administered by the Economic Development Authority for the City
of Shakopee (the “Authority”); and
WHEREAS, following a duly noticed joint public hearing held on the date hereof by the Board of
Commissioners of the Authority (the “Board”) and the City Council of the City (the “Council”), the
Authority and the City approved the modification of the Redevelopment Plan for the Project (the
“Redevelopment Plan”) and approved a new tax increment financing plan (the “TIF Plan”) for Tax
Increment Financing (Economic Development)District No. 16(the “TIF District”), all as described in a
plan document presented to this Board; and
WHEREAS, Rahr Corporation, a Delaware corporation (the “Developer”),owns and operates a
malting facility with warehouse and distribution facilities in the Project and has determined to acquire
adjacent property for the purposes of adding another malting facility, warehouse and distribution buildings,
a research and development facility, and related office space (collectively, the “Minimum Improvements”);
and
WHEREAS, there has been presented before this Council a Contract for Private Development (the
“Agreement”) between the City, the Authority, and the Developer setting forth the terms of the development
of the Minimum Improvements, which agreement includes a “business subsidy agreement” as defined in
Minnesota Statutes, Section 166J.993 to 116J.995, as amended; and
WHEREAS, on the date hereof, the Board and the Council held a joint public hearing relating to the
Agreement, incorporating the business subsidy agreement, and at the public hearing the views of all
interested parties were heard.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Shakopee,Minnesota
that:
1.The Councilapproves the Agreement, including the business subsidy agreement contained
therein, in substantially the form on file in City Hall. The Mayor, the City Administrator, and the City Clerk
are hereby authorized and directed to execute and deliver the Agreement. All of the provisions of
Agreement, when executed and delivered as authorized herein, shall be deemed to be a part of this
458750v1 JAE SH235-22
resolution as fully and to the same extent as if incorporated verbatim herein and shall be in full force and
effect from the date of execution and delivery thereof. The Agreement shall be substantially in the form on
filewith the Authoritywhich ishereby approved, with such omissions and insertions as do not materially
change the substance thereof, or as the Mayor, the City Administrator, and the City Clerkin their discretion,
shall determine, and the execution thereof by the Mayor, the City Administrator, and the City Clerkshall be
conclusiveevidence of such determination.
st
Approved by the City Council of the City of Shakopee, Minnesotathis 31day of March, 2015.
Mayor
ATTEST:
Acting City Clerk
2
458750v1 JAE SH235-22
CITY OF SHAKOPEE, MINNESOTA
RESOLUTION NO. 7568
RESOLUTION APPROVING TAX INCREMENT FINANCING
PLAN FOR TAX INCREMENT FINANCING (ECONOMIC
DEVELOPMENT) DISTRICT NO. 16AND A MODIFIED
REDEVELOPMENT PLAN FOR THE MINNESOTA RIVER
VALLEY HOUSING AND REDEVELOPMENT PROJECT NO. 1
WHEREAS, the City of Shakopee, Minnesota(the “City”) has previously established its Minnesota
River Valley Housing and Redevelopment Project No. 1 (the “Project”) pursuant to Minnesota Statutes,
Section 469.001 to 469.047, as amended(the “HRA Act”); and
WHEREAS, within the Project the City has created certain tax increment financing districts
pursuant to Minnesota Statutes, Sections 469.174 to 469.1794, as amended(the “TIF Act”); and
WHEREAS, the Project is now administered by the Economic Development Authority for the City
of Shakopee (the “Authority”); and
WHEREAS, the Authority and City have determined to modify the Redevelopment Plan for the
Project (the “Redevelopment Plan”) and approve a new tax increment financing plan (the “TIF Plan”) for
Tax Increment Financing (Economic Development) District No. 16(the “TIF District”), all as described in a
plan document presented to the City Council of the City (the “Council”) on this date; and
WHEREAS, the TIF Plan was, in accordance with the HRA Act and TIF Act, referred to the City
Planning Commission and by resolution adoptedby the City Planning Commission on March 5, 2015, the
City Planning Commission found that the modified Redevelopment Plan and the TIF Plan conform to the
general plan for the development of the City as a whole; and
WHEREAS, pursuant to Section 469.175, subdivision2of the TIF Act, the proposed TIF Plan and
the estimates of the fiscal and economic implications of the TIF Plan were presented to the School Board of
Independent School District No. 720 and to the County Board of Commissioners of Scott County on
February 25, 2015; and
WHEREAS, during a joint meeting of the Board of Commissioners of the Authority and the
Council and by resolution adopted on the date hereof, the Authority approved the modified Redevelopment
Plan and the TIF Plan and referred such documentsto the Council for public hearing and consideration; and
WHEREAS, this Council has reviewed the contents of the modified Redevelopment Plan and the
TIF Plan;
WHEREAS, on the date hereof, the Board of the Authority and the Council held a joint public
hearing relating to the modified Redevelopment Plan and the establishment of the TIF Districtandthe
TIF Plan, and at the public hearing, the views of all interested parties were heard.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Shakopee,Minnesota
that:
458748v1 JAE SH235-22
Section 1.Findings; Project
1.01.It is hereby found and determined that within the Project as modified there exist conditions
of economic obsolescence, underutilization, and inappropriate uses of land constituting blight within the
meaning of the HRA Act. The findings stated in the modified RedevelopmentPlan are incorporated herein
by reference.
1.02.It is further specifically found and determined that:
(a)the land within the Project as modified would not be made available for
redevelopment without the public intervention and financial assistance described in the
Redevelopment Plan;
(b)the Redevelopment Planas modified will afford maximum opportunity, consistent
with the sound needs of the City as a whole, for the redevelopment of the Project by private
enterprise; and
(c)the Redevelopment Planas modified conforms to the general plan for development
of theCity as set forth in the comprehensive municipal plan.
Section 2.Findings; TIF District No. 16
2.01.It is found and determined that it is necessary and desirable for the sound and orderly
development of the Project, and for the protection and preservation of the public health, safety, and general
welfare, that the authority of the TIF Act be exercised by the City to provide public financial assistance to
the TIF District and the Project.
2.02.It is further found and determined, and it is the reasoned opinion of the City, that the
development proposed in the TIF Plan could not reasonably be expected to occur solely through private
investment within the reasonably foreseeable future and the increased market value of the site that could
reasonably be expected to occur without the use of tax increment financing would be less than the increase
in the market value estimated to result from the proposed development after subtracting the present value of
the projected tax increments for the maximum duration of the district permitted by the TIF Plan.
2.03.The proposed public improvements to be financed in part through tax increment financing
are necessary to permit the City to realize the full potential of the TIF District and the Project in terms of
development intensity, employment opportunities, and tax base.
2.04.The TIF Plan conforms to the general plan for development of the City as a whole.
2.05.The TIF Plan will afford maximum opportunity, consistent with the sound needs of the City
as a whole, for the development of the TIF District and the Project by private enterprise.
2.06.The TIF District is an economic development district under Section 469.174,
subdivision12 of the TIF Act.
2.07.Reasons and facts supporting all the above findings are set forth in the TIF Plan and are
incorporated herein by reference. The Council has also relied upon the reports and recommendations of its
staff and consultants, as well as the personal knowledge of members of the Council, in reaching its
conclusionsregarding the TIF Plan.
2
458748v1 JAE SH235-22
Section 3.Public Purpose
The adoption of the TIF Planconforms in all respects to the requirements of the TIFAct. The
TIF Planwill help facilitate development that will create new commercial uses, provide employment
opportunities, and improve the tax base. The City expressly finds that any private benefit to be received
by the Developer is incidental, as the tax increment assistance is provided solely to make the
redevelopment financially feasible and thus produce the public benefits described. Therefore, the City
finds that the public benefits of the TIF Plan exceed any private benefits.
Section 4.Approvals; Further Proceedings
4.01.The modified Redevelopment Plan and the TIF Plan for the TIF District arehereby
approved and adopted in substantially the formson file at City Hall.
4.02.The Authority is authorized and directed to file a request for certification of the TIF District
with the Scott County Auditor and to file a copy of the modified Redevelopment Plan and the TIF Plan with
the Minnesota Commissioner of Revenue as required by the TIF Act.
st
Approved by the City Council of the City of Shakopee, Minnesotathis 31day of March, 2015.
Mayor
ATTEST:
Acting City Clerk
3
458748v1 JAE SH235-22
Shakopee, Minnesota
Shakopee Economic Development Authority
Modification to Redevelopment Plan for Minnesota River Valley
Housing and Redevelopment Project No. 1
And
Tax Increment Financing Plan
for
Tax Increment Financing (Economic Development)
District No. 16
(Rahr Expansion Project)
Draft Dated: March 26, 2015
Public Hearing Scheduled: March 31, 2015
Prepared by:
SPRINGSTED INCORPORATED
380 Jackson Street, Suite 300
St. Paul, MN 55101-2887
(651) 223-3000
WWW.SPRINGSTED.COM
TABLE OF CONTENTS
Section I - BACKGROUNDPage(s)
A Introduction
..................................................................................................................... 1
B Definitions
...................................................................................................................... 1
Section II – MODIFICATION TO REDEVELOPMENT PLAN FOR MINNESOTA RIVER VALLEY HOUSING AND
REDEVELOPMENT PROJECT NO. 1
Section III – TAX INCREMENT FINANCING PLAN FOR TIF DISTRICT NO. 16 Page(s)
A. Statutory Authorization .............................................................................................................................. 2
B. Statement of Need and Public Purpose ..................................................................................................... 2
C. Statement of Objectives ............................................................................................................................ 2
D. Designation of Tax Increment Financing District as an Economic Development District ........................... 2
E. Duration of theTIF District ......................................................................................................................... 3
F. Property to be Included in the TIF District.................................................................................................. 3
G. Property to be Acquired in the TIF District ................................................................................................. 4
H. Specific Development Expected to Occur Within the TIF District .............................................................. 5
I. Findings and Need for Tax Increment Financing ....................................................................................... 5
J. Estimated Public Costs .............................................................................................................................. 7
K. Estimated Sources of Revenue ................................................................................................................. 7
L. Estimated Amount of Bonded Indebtedness .............................................................................................. 8
M. Original Net Tax Capacity .......................................................................................................................... 8
N. Original Tax CapacityRate ........................................................................................................................ 8
O. Projected Retained Captured Net Tax Capacity and Projected Tax Increment ......................................... 9
P. Use of Tax Increment ................................................................................................................................ 9
Q. Excess Tax Increment ............................................................................................................................... 10
R. Tax Increment Pooling and the Five Year Rule ......................................................................................... 11
S. Limitation on AdministrativeExpenses ...................................................................................................... 11
T. Limitation on Property Not Subject to Improvements - Four Year Rule ..................................................... 12
U. Estimated Impact on Other Taxing Jurisdictions ........................................................................................ 12
V. Prior Planned Improvements ..................................................................................................................... 12
W. Development Agreements ......................................................................................................................... 13
X. Assessment Agreements ........................................................................................................................... 13
Y. Modifications of the Tax Increment FinancingPlan ................................................................................... 13
Z. Administration of the Tax Increment FinancingPlan.................................................................................. 14
AA. Financial Reporting and Disclosure Requirements .................................................................................... 14
Map of the Tax Increment Financing District ....................................................................................... EXHIBIT I
AssumptionsReport ........................................................................................................................... EXHIBIT II
Projected Tax IncrementReport ......................................................................................................... EXHIBIT III
Estimated Impact on Other Taxing Jurisdictions Report...................................................................... EXHIBIT IV
Market Value Analysis Report ............................................................................................................. EXHIBIT V
Projected Pay-As-You-Go Note Report ............................................................................................... EXHIBIT VI
City of Shakopee and Shakopee Economic Development Authority, Minnesota
I. – BACKGROUND
Section A Introduction
The City created the Minnesota River Valley Housing and Redevelopment Project No. 1 on January 2, 1979
(originally designated as Valley Industrial Park Redevelopment Project No. 1) and transferred that project to the
Economic Development Authority for the City of Shakopee (the “Authority”) upon creation of the Authority in 1995.
The Authority and City have now determined a need to create Tax Increment Financing District No. 16, an economic
development district, within the Project.
Section B Definitions
The terms defined in this section have the meanings given herein, unless the context in which they are used indicates
a different meaning:
"Authority" means the Shakopee Economic Development Authority.
"City" means the City of Shakopee, Minnesota; also referred to as a "Municipality".
"City Council" means the City Council of the City; also referred to as the "Governing Body".
"County" means Scott County, Minnesota.
"Project" means the Minnesota River Valley Housing and Redevelopment Project No. 1.
“Project Area” means the property within the Project, as described in the Project Plan and as shown in Exhibit I
attached.
“Project Plan” means the Redevelopment Plan for the Project, as modified from time to time.
"School District" means Independent School District No. 720, Minnesota.
"State" means the State of Minnesota.
"TIF Act" means Minnesota Statutes, Sections 469.174 through 469.1799, both inclusive.
"TIF District" means Tax Increment Financing (Economic Development) District No. 16.
"TIF Plan" means the tax increment financing plan for the TIF District (this document).
II. – MODIFICATION TO REDEVELOPMENT PLAN FOR MINNESOTA RIVER VALLEY HOUSING AND
REDEVELOPMENT PROJECT NO. 1
The City and the Authority intend, through this document, to modify the Project Plan for the Project. Section 1.6
(regarding parcels to be acquired within the Project), Section 1.7 (regarding estimated public improvement costs
within the Project) and Section 1.8 (regarding public improvements and facilities within the Project) of the existing
Project Plan are deemed modified to incorporate the terms of the TIF Plan following in Section III of this document.
The boundaries and general objectives of the Project remain unchanged.
SPRINGSTED
Page 1
City of Shakopee and Shakopee Economic Development Authority, Minnesota
III. – TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 16
Section A Statutory Authorization
The Authority, with approval of the City Council, is authorized to establish TIF District No. 16 and this TIF Plan
pursuant to the Act and the TIF Act.
Section B Statement of Need and Public Purpose
The Authority has determined that conditions exist within the Project Area which have prevented further development
of land by private enterprise. It has been found that the Project Area is potentially more useful and valuable for
contributing to the public health, safety and welfare than has been realized under existing development.
The development of these parcels is not attainable in the foreseeable future without the intervention of the Authority in
the private development process. The Authority has prepared the Project Plan, which provides for the elimination of
these conditions, thereby making the land useful and valuable for contributing to the public health, safety and welfare.
Section C Statement of Objectives
The objectives outlined in Section 1.4 of the Project Plan, as amended, are incorporated herein by reference.
Section D Designation of Tax Increment Financing District as an
Economic Development District
Economic development districts are a type of tax increment financing district which consist of any project, or portions
of a project, which the City finds to be in the public interest because:
(1) it will discourage commerce, industry, or manufacturing from moving their operations to
another state or municipality;
(2) it will result in increased employment in the state; or
(3) it will result in preservation and enhancement of the tax base of the state.
The TIF District qualifies as an economic development district in that the proposed development described in this TIF
Plan (see Section I) meets the criteria listed above in (2) and (3). Without establishment of the TIF District, the
proposed development would not occur within the City. The proposed development will also result in increased
employment and enhancement of the tax base in both the City and the State.
Tax increments from an economic development district must be used to provide improvements, loans, subsidies,
grants, interest rate subsidies, or other assistance in which at least 85% of the square footage of the facilities to be
constructed are used for any of the following purposes:
(1) manufacturing or production of tangible personal property, including processing, resulting in the
change of the condition of the property;
(2) warehousing, storage and distribution of tangible personal property, excluding retail sales;
(3) research and development related to the activities listed in (1) or (2) above;
(4) telemarketing if that activity is the exclusive use of the property;
SPRINGSTED
Page 2
City of Shakopee and Shakopee Economic Development Authority, Minnesota
(5) tourism facilities (see M.S. Section 469.174, Subd. 22); or
(6) space necessary for and related to the activities listed in (1) through (5) above.
In addition to the uses specified above, tax increments may also be used to provide assistance for up to 15,000
square feet of any separately owned commercial facility located within a "small city" (see M.S. Section 469.176, Subd.
4c), or to pay for excessive site preparation and public improvement costs in a district containing bedrock soils
conditions in 80% or more of its acreage (see M.S. Section 469.176, Subd. 4c).
Tax increments from the TIF District will be used to provide financial assistance to the proposed development (see
Section I), in which over 85% of the square footage of the facilities to be constructed will be used for manufacturing,
warehousing, or research or other purposes as listed in (1), (2), & (3) above.
Section E Duration of the TIF District
Economic development districts may remain in existence 8 years from the date of receipt by the Authority of the first
tax increment. The Authority anticipates that the TIF District will remain in existence for a period of 9 total years years
(projected to be through the year 2025). Modifications of this plan (see Section AA) shall not extend these limitations.
All tax increments from taxes payable in the year the TIF District is decertified shall be paid to the Authority.
Section F Property to be Included in the TIF District
The TIF District is an approximate 10.86 acre area of land located within the Project Area. A map showing the
location of the TIF District is shown in Exhibit I. The boundaries and area encompassed by the TIF District are
described below:
Parcel ID Number Legal Description
270011040*
270011050*
270010960*
270010970*
Lot 1, Block 1, Rahr Addition*
270010981*
270010991*
270011000*
270011010*
270010930*
SPRINGSTED
Page 3
City of Shakopee and Shakopee Economic Development Authority, Minnesota
270010950*
270010920*
270011060*
270011031*
CITY OF SHAKOPEE Lot 001 Block 038 SubdivisionCd 27001 & LOTS
270012930
2-10 & N1/2 VAC ST LYING ADJ TO BLK 38
CITY OF SHAKOPEE Lot 006 Block 018 SubdivisionCd 27001 P/O
LOTS 6-10 LYING N OF LINE COM NE COR, S 127.92' TO POB, W
270011231ALONG LINE 10' N
OF CL OF TRACK TO W LINE OF BLOCK 18 & E1/2 P/O VAC SHUMWAY
ST
CITY OF SHAKOPEE Lot 007 Block 017 SubdivisionCd 27001 & P/O
LOTS 6-10 & P/O BLK 18 EX P/O S1/2 LOTS 1 & 2 IN PID 270011230 & EX
270011211
P/O LOTS 6-
10 BLK 18 IN PID 270011231
CITY OF SHAKOPEE Lot 006 Block 017 SubdivisionCd 27001 & LOT 7
270011210
& E1/2 OF LOT 8 & W1/2 OF P/O VAC SHUMWAY ST
CITY OF SHAKOPEE SubdivisionCd 27001 P/O VACATED STREET &
270011160
ALLEYS ADJ TO BLK 14,15 & 16
CITY OF SHAKOPEE Lot 001 Block 017 SubdivisionCd 27001 P/O S1/2
270011170
OF LOTS 1-4 BLK 17
CITY OF SHAKOPEE Lot 001 Block 018 SubdivisionCd 27001 S1/2 OF
270011230
1 & W 20' OF S1/2 OF 2
RLS 089 Lot TCT Block 00A SubdivisionCd 27096
270960010
270960020 RLS 089 Lot TCT Block 00B SubdivisionCd 27096
*These parcels are in the process of being replatted into a single parcel. The legal description shown is reflective of
the parcel following the replatting; however, at the time of drafting of the Plan the new property ID number is not yet
provided. Full legal descriptions for each of the remaining parcels will be provided prior to approval and certification
of the Plan.
The area encompassed by the TIF District shall also include all street or utility right-of-ways located upon or adjacent
to the property described above.
Section G Property to be Acquired in the TIF District
The Authority may acquire and sell any or all of the property located within the TIF District; however, the Authority
does not anticipate acquiring any such property at this time, other than for road right of way or utility purposes.
SPRINGSTED
Page 4
City of Shakopee and Shakopee Economic Development Authority, Minnesota
Section H Specific Development Expected to Occur Within the TIF District
The proposed development is expected to consist of four individual structures; a 112,000 square foot manufacturing,
assembly, and processing plant, a 90,000 square foot warehouse, a 14,500 square foot maintenance warehouse, and
an 18,400 square foot research laboratory. Total office space within the four individual buildings totals 3,340 square
feet, and necessary and related to the eligible activities in each building. At least 85% of the facility will be used for
manufacturing, warehousing and distribution, or research and development, with less than 15% available for office
space. The development will result in increased employment within the City, in compliance with statutory
requirements. It is anticipated tax increment will be used to finance a portion of the TIF eligible costs incurred in the
development of the site. In addition, the Authority anticipates using available tax increment for related administrative
expenses, pooling for TIF-eligible improvements outside of the boundaries of the district but within the Project Area
for eligible purposes set forth in Minn. Stat. section 469.176 subd. 4c., and any other eligible expenditures associated
with the development of the site.
Construction of the facility is projected to occur from April of 2015 through January of 2017. The project is expected
to be fully constructed in 2017, and be 100% assess and on the tax rolls as of January 2, 2018 for taxes payable in
2019. The facility is anticipated to be approximately 65% constructed in 2015, and is anticipated to generate the
receipt of first increment in taxes payable 2017.
At the time this document was prepared there were no signed construction contracts with regards to the above
described development.
Section I Findings and Need for Tax Increment Financing
In establishing the TIF District, the Authority makes the following findings:
(1) The TIF District qualifies as an economic development district;
See Section E of this document for the reasons and facts supporting this finding.
(2)The proposed development, in the opinion of the Authority, would not reasonably be expected to occur
solely through private investment within the reasonably foreseeable future, and the increased market
value of the site that could reasonably be expected to occur without the use of tax increment would be
less than the increase in market value estimated to result from the proposed development after
subtracting the present value of the projected tax increments for the maximum duration of the TIF
District permitted by the TIF Plan.
Factual basis:
Proposed development not expected to occur:
The proposed development is expected to consist of a 112,000 square foot manufacturing, assembly and
processing plant, a 90,000 square foot warehouse, an 18,4000 square foot research laboratory, and a
14,500 square foot maintenance warehouse. Total office space within the four individual building totals
3,340 square feet, and is necessary and related to the operation of each building. The developer of the site
has submitted information to the Authority demonstrating that the development of this site is not financially
feasible without the assistance provided in this TIF Plan.
The Authority has determined that the proposed development would not occur but for the financial
assistance provided in this TIF Plan because of the increased costs related to the development of the site.
The cost of site improvements, demolition of existing buildings, utility connections, and utility reconfigurations
necessary to develop the site, are significantly higher than other localities outside of the state and country
explored by the company. Additionally, the proposed site presents greater logistic and operating expenses
in comparison to the other sites. Combined the increased costs associated with the development and
SPRINGSTED
Page 5
City of Shakopee and Shakopee Economic Development Authority, Minnesota
operation of the site, indicates the development of the site would not be feasible, and would not occur, but-
fore the use of tax increment to finance a portion of the costs related to site improvements and infrastructure
costs. The Authority finds the use of tax increment necessary to finance the additional improvements such
as site improvements and infrastructure costs that currently do not allow development on the property. The
Authority anticipates providing financial assistance on a pay-as-you-go basis.
No higher market value expected:
The proposed development, in the opinion of the Authority, would not reasonably be expected to occur solely
through private investment within the reasonably foreseeable future, and the increased market value of the
site that could reasonably be expected to occur without the use of tax increment would be less than the
increase in market value estimated to result from the proposed development after subtracting the present
value of the projected tax increments for the maximum duration of the TIF District permitted by the TIF Plan;
The proposed development is expected to consist of a 112,000 square foot manufacturing, assembly and
processing plant, a 90,000 square foot warehouse, an 18,4000 square foot research laboratory, and a
14,500 square foot maintenance warehouse which will require substantial development costs including site
improvements and utility infrastructure. The increased market value of the site that could reasonably be
expected to occur without the use of tax increment financing would be less than the increase in market value
estimated to result from the proposed development after subtracting the present value of the projected tax
increments for the maximum duration of the TIF District permitted by the TIF Plan. Without improvements
the Authority has no reason to expect that significant development would occur without assistance similar to
that provided in this plan. For the same reasons that the desired development described above is not
feasible without tax increment assistance, the Authority believes that no alternative development is likely to
occur without similar assistance. Almost any other development of the site would require the same
improvements to site improvements and utility infrastructure. Therefore, the Authority concludes as follows:
The proposed development, in the opinion of the Authority, would not reasonably be expected to occur solely
through private investment within the reasonably foreseeable future.
To summarize the basis for the Authority’s findings regarding alternative market value, in accordance with
Minnesota Statutes, Section 469.175, Subd. 3(d), the Authority makes the following determinations:
a.The Authority’s estimate of the amount by which the market value of the site will increase
without the use of tax increment financing is $0 (for the reasons described above), except some
unknown amount of appreciation.
b. If the proposed development to be assisted with tax increment occurs in the District, the
total increase in market value would be approximately $16,568,332, including the value of the
building (See Exhibit V).
c. The present value of tax increments from the District for the maximum duration of the
district permitted by the TIF Plan is estimated to be $1,948,340 (See Exhibit V).
d. Even if some development other than the proposed development were to occur, the
Authority finds that no alternative would occur that would produce a market value increase greater
than $14,619,992 (the amount in clause b less the amount in clause c) without tax increment
assistance.
(3) The TIF Plan would afford maximum opportunity, consistent with the sound needs of the Authority
as a whole, for development of the Project Area by private enterprise.
Factual basis: The proposed development is the construction four individual buildings; a 112,000 square
foot manufacturing, assembly and processing plant, a 90,000 square foot warehouse, an 18,4000 square
foot research laboratory, and a 14,500 square foot maintenance warehouse to be constructed in the Project
SPRINGSTED
Page 6
City of Shakopee and Shakopee Economic Development Authority, Minnesota
Area that is expected to create approximately 28 new jobs in the City, while retaining these jobs in the State,
plus create substantial new tax base for the City and the State. The development clearly meets the
Authority’s economic development goals in terms of land use, job retention, and wage levels.
(4) The TIF Plan conforms to general plans for development of the City as a whole.
Factual basis: The City Planning Commission has determined that the development proposed in the TIF
Plan conforms to the City comprehensive plan.
Section J Estimated Public Costs
The estimated public costs of the TIF District are listed below. Such costs are eligible for reimbursement from tax
increments of the TIF District.
Land/building acquisition, site improvements/infrastructure costs,
installation of public utilities, and other eligible expenses $1,883,086
Bond principal payments 0
Bond interest payments 0
Loan Interest payments 0
Administrative expenses 58,239
Capitalized interest 0
Total $1,941,325
The Authority anticipates using tax increment to the extent available to finance land acquisition, site improvements
and infrastructure costs, related administrative expenses, and other TIF-eligible expenditures.
The Authority reserves the right to administratively adjust the amount of any of the items listed above or to
incorporate additional eligible items, so long as the total estimated public cost ($1,941,325) is not increased. The
Authority also reserves the right to fund any of the identified costs with any other legally available revenues, but
anticipates that such costs will be primarily financed with tax increments.
Section K Estimated Sources of Revenue
Tax increment revenue $1,941,325
Interest on invested funds 0
Bond proceeds 0
Loan proceeds 0
Real estate sales 0
Special assessments 0
Rent/lease revenue 0
Grants 0
Total $1,941,325
The Authority anticipates providing financial assistance for site improvements and infrastructure costs, and other TIF
eligible expenses to the proposed development on a pay-as-you-go basis. As tax increments are collected from the
TIF District in future years, a portion of these taxes will be used by the Authority to reimburse the developer/owner for
public costs incurred (see Section K).
The Authority reserves the right to finance any or all public costs of the TIF District using pay-as-you-go assistance,
internal funding, general obligation or revenue debt (referred to together as “TIF Bonds”), or any other financing
SPRINGSTED
Page 7
City of Shakopee and Shakopee Economic Development Authority, Minnesota
mechanism authorized by law. The Authority also reserves the right to use other sources of revenue legally
applicable to the Project Area to pay for such costs including, but not limited to, special assessments, utility revenues,
federal or state funds, and investment income.
Section L Estimated Amount of Bonded Indebtedness
The Authority currently plans to issue bonds only in the form of one or more pay-as-you go revenue notes, but
reserves the right to issue bonds in any form, including without limitation any interfund loan with interest not to exceed
the maximum permitted under Section 469.178, subd. 7 of the TIF Act. Such bonds shall be issued in an amount not
to exceed $1,941,325 (total estimated public cost).
Section M Original Net Tax Capacity
The County Auditor shall certify the original net tax capacity of the TIF District. This value will be equal to the total net
tax capacity of all property in the TIF District as certified by the State Commissioner of Revenue. For districts certified
between January 1 and June 30, inclusive, this value is based on the previous assessment year. For districts
certified between July 1 and December 31, inclusive, this value is based on the current assessment year.
The Authority intends to file the request for certification prior to July 1, 2015. Therefore, the original net tax capacity
will be the net tax capacity as of January 2, 2014.
The Estimated Market Value of all property within the TIF District as of January 2, 2014, for taxes payable in 2015, is
$2,529,400 and the estimated tax capacity is $50,588, which is estimated to be the original net tax capacity of the TIF
District.
Each year the County Auditor shall certify the amount that the original net tax capacity has increased or decreased as
a result of:
(1) changes in the tax-exempt status of property;
(2) reductions or enlargements of the geographic area of the TIF District;
(3) changes due to stipulation agreements or abatements; or
(4) changes in property classification rates.
Section N Original Tax Capacity Rate
The County Auditor shall also certify the original tax capacity rate of the TIF District. This rate shall be the sum of all
local tax rates that apply to property in the TIF District. This rate shall be for the same taxes payable year as the
original net tax capacity.
In future years, the amount of tax increment generated by the TIF District will be calculated using the lesser of (a) the
sum of the current local tax rates at that time or (b) the original tax capacity rate of the TIF District.
As noted in Section N, the Authority intends to file the TIF District for certification prior to July 1, 2015; therefore, the
Original Local Tax Rate will be the rate that applies for taxes payable in 2015.
At the time this document was prepared, the sum of all local tax rates that apply to property in the TIF District, for
taxes levied in 2014 and payable in 2015, was not yet available. When this total becomes available, the County
Auditor shall certify this amount as the original tax capacity rate of the TIF District. For purposes of estimating the tax
SPRINGSTED
Page 8
City of Shakopee and Shakopee Economic Development Authority, Minnesota
increment generated by the TIF District, the proposedsum of the local tax rates for taxes levied in 2014 and payable
in 2015, is 116.450% as shown below.
Proposed 2014/2015
Taxing Jurisdiction Local Tax Rate
City of Shakopee 39.092%
Scott County 36.617%
ISD #720 35.575%
Other 5.166%
Total 116.450%
Section O Projected Retained Captured Net Tax Capacity and
Projected Tax Increment
The Authority anticipates that the facility will begin construction in 2015 and will be partially completed by December
31, 2015, and 100% completed by December 31, 2017, creating a partial tax capacity for TIF District No. 16 of
$212,990 as of January 2, 2016, and a completed total tax capacity of $339,165 as of January 2, 2018. The captured
tax capacity as of January 2, 2016 for taxes payable 2017 estimated to be $104,511 and the first year of tax
increment is estimated to be $121,703. The first full year of captured tax capacity is projected for taxes payable
2019, with captured tax capacity of $185,709, and the first full year of tax increment estimated to be $216,258. A
complete schedule of estimated tax increment from the TIF District is shown in Exhibit III.
The estimates shown in this TIF plan assume that commercial class rates remain at 1.5% of the estimated market
value up to $150,000 and 2.0% of the estimated market value over $150,000, and assume 2% annual increases in
market values.
Each year the County Auditor shall determine the current net tax capacity of all property in the TIF District. To the
extent that this total exceeds the original net tax capacity, the difference shall be known as the captured net tax
capacity of the TIF District.
For communities affected by the fiscal disparity provisions of Minnesota Statutes, Chapter 473F and Chapter 276A,
the original net tax capacity of the TIF District shall be determined before the application of fiscal disparity. In
subsequent years, the current net tax capacity shall either (a) be determined before the application of fiscal disparity
or (b) exclude the product of any fiscal disparity increase in the TIF District (since the original net tax capacity was
certified) times the appropriate fiscal disparity ratio. The method the Authority elects shall remain the same for the life
of the TIF District, except that a single change may be made at any time from method (a) to method (b) above. »The
Authority elects method (b), or M.S. Section 469.177, Subdivision 3(a).
The County Auditor shall certify to the Authority the amount of captured net tax capacity each year. The Authority
may choose to retain any or all of this amount. It is the Authority's intention to retain 100% of the captured net tax
capacity of the TIF District. Such amount shall be known as the retained captured net tax capacity of the TIF District.
Exhibit II gives a listing of the various information and assumptions used in preparing a number of the exhibits
contained in this TIF Plan, including Exhibit III which shows the projected tax increment generated over the
anticipated life of the TIF District.
Section P Use of Tax Increment
Each year the County Treasurer shall deduct 0.36% of the annual tax increment generated by the TIF District and pay
such amount to the State's General Fund. Such amounts will be appropriated to the State Auditor for the cost of
financial reporting and auditing of tax increment financing information throughout the state. Exhibit III shows the
projected deduction for this purpose over the anticipated life of the TIF District.
SPRINGSTED
Page 9
City of Shakopee and Shakopee Economic Development Authority, Minnesota
The City has determined that it will use 100% of the remaining tax increment generated by the TIF District for any of
the following purposes:
(1) pay for the estimated public costs of the TIF District (see Section K) and County administrative
costs associated with the TIF District (see Section T);
(2) pay principal and interest on one or more pay–go–notes, tax increment bonds or other bonds
issued to finance the estimated public costs of the TIF District;
(3) accumulate a reserve securing the payment of tax increment bonds or other bonds issued to
finance the estimated public costs of the TIF District;
(4) pay all or a portion of the county road costs as may be required by the County Board under M.S.
Section 469.175, Subdivision 1a; or
(5) return excess tax increments to the County Auditor for redistribution to the City, County and School
District.
Tax increments from property located in one county must be expended for the direct and primary benefit of a project
located within that county, unless the county board involved waives this requirement. Tax increments shall not be
used to circumvent levy limitations applicable to the City.
Tax increment shall not be used to finance the acquisition, construction, renovation, operation, or maintenance of a
building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any
other local unit of government or the State or federal government. Further, tax increments may not be used to
finance: a commons area used as a public park; facilities used for social or recreational purposes (whether public or
private); or publicly-owned facilities used for conference purposes; provided that tax increment may be used for a
privately owned conference facility, and for parking structures whether public or privately owned and whether or not
they are ancillary to one of the otherwise prohibited uses described above.
If there exists any type of agreement or arrangement providing for the developer, or other beneficiary of assistance, to
repay all or a portion of the assistance that was paid or financed with tax increments, such payments shall be subject
to all of the restrictions imposed on the use of tax increments. Assistance includes sale of property at less than the
cost of acquisition or fair market value, grants, ground or other leases at less then fair market rent, interest rate
subsidies, utility service connections, roads, or other similar assistance that would otherwise be paid for by the
developer or beneficiary.
Section Q Excess Tax Increment
In any year in which the tax increments from the TIF District exceed the amount necessary to pay the estimated
public costs authorized by the TIF Plan, the Authority shall use the excess tax increments to:
(1) prepay any outstanding tax increment bonds;
(2) discharge the pledge of tax increments thereof;
(3) pay amounts into an escrow account dedicated to the payment of the tax increment bonds; or
(4) return excess tax increments to the County Auditor for redistribution to the City, County and School
District. The County Auditor must report to the Commissioner of Education the amount of any
excess tax increment redistributed to the School District within 30 days of such redistribution.
SPRINGSTED
Page 10
City of Shakopee and Shakopee Economic Development Authority, Minnesota
Section R Tax Increment Pooling and the Five Year Rule
At least 80% of the tax increments from the TIF District must be expended on activities within the district or to pay for
bonds used to finance the estimated public costs of the TIF District (see Section E for additional restrictions). No
more than 20% of the tax increments may be spent on costs outside of the TIF District but within the boundaries of
the Project Area, except to pay debt service on credit enhanced bonds. All administrative expenses are considered to
have been spent outside of the TIF District. Tax increments are considered to have been spent within the TIF District
if such amounts are:
(1) actually paid to a third party for activities performed within the TIF District within five years after
certification of the district;
(2) used to pay bonds that were issued and sold to a third party, the proceeds of which are reasonably
expected on the date of issuance to be spent within the later of the five-year period or a reasonable
temporary period or are deposited in a reasonably required reserve or replacement fund.
(3) used to make payments or reimbursements to a third party under binding contracts for activities
performed within the TIF District, which were entered into within five years after certification of the
district; or
(4) used to reimburse a party for payment of eligible costs (including interest) incurred within five years
from certification of the district.
Beginning with the sixth year following certification of the TIF District, at least 80% of the tax increments must be used
to pay outstanding bonds or make contractual payments obligated within the first five years. When outstanding bonds
have been defeased and sufficient money has been set aside to pay for such contractual obligations, the TIF District
must be decertified.
The Authority does not expect that allowable pooling expenditures will be made outside of the TIF District but within
the Project Area (along with allowable administrative expenses), but such expenditures are expressly authorized in
this TIF Plan.
Section S Limitation on Administrative Expenses
Administrative expenses are defined as all costs of the Authority other than:
(1) amounts paid for the purchase of land;
(2)amounts paid for materials and services, including architectural and engineering services directly
connected with the physical development of the real property in the project;
(3)relocation benefits paid to, or services provided for, persons residing or businesses located in the
project;
(4)amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued
pursuant to section 469.178; or
(5)amounts used to pay other financial obligations to the extent those obligations were used to finance
costs described in clause (1) to (3).
Administrative expenses include amounts paid for services provided by bond counsel, fiscal consultants, planning or
economic development consultants, and actual costs incurred by the County in administering the TIF District. Tax
increments may be used to pay administrative expenses of the TIF District up to the lesser of (a) 10% of the total
estimated public costs authorized by the TIF Plan or (b) 10% of the total tax increment expenditures for the project.
SPRINGSTED
Page 11
City of Shakopee and Shakopee Economic Development Authority, Minnesota
Section T Limitation on Property Not Subject to Improvements - Four Year Rule
If after four years from certification of the TIF District no demolition, rehabilitation, renovation, or qualified
improvement of an adjacent street has commenced on a parcel located within the TIF District, then that parcel shall
be excluded from the TIF District and the original net tax capacity shall be adjusted accordingly. Qualified
improvements of a street are limited to construction or opening of a new street, relocation of a street, or substantial
reconstruction or rebuilding of an existing street. The Authority must submit to the County Auditor, by February 1 of
the fifth year, evidence that the required activity has taken place for each parcel in the TIF District.
If a parcel is excluded from the TIF District and the Authority or owner of the parcel subsequently commences any of
the above activities, the Authority shall certify to the County Auditor that such activity has commenced and the parcel
shall once again be included in the TIF District. The County Auditor shall certify the net tax capacity of the parcel, as
most recently certified by the Commissioner of Revenue, and add such amount to the original net tax capacity of the
TIF District.
Section U Estimated Impact on Other Taxing Jurisdictions
Exhibit IV shows the estimated impact on other taxing jurisdictions if the maximum projected retained captured net tax
capacity of the TIF District was hypothetically available to the other taxing jurisdictions. The Authority believes that
there will be no adverse impact on other taxing jurisdictions during the life of the TIF District, since the proposed
development would not have occurred without the establishment of the TIF District and the provision of public
assistance. A positive impact on other taxing jurisdictions will occur when the TIF District is decertified and the
development therein becomes part of the general tax base.
The fiscal and economic implications of the proposed tax increment financing district, as pursuant to Minnesota
Statutes, Section 469.175, Subdivision 2, are listed below.
1.The total amount of tax increment that will be generated over the life of the district is estimated to be
$1,941,325.
2.To the extent the manufacturing and warehouse facility in the proposed TIF District generates any public
cost impacts on city-provided services such as police and fire protection, public infrastructure, and borrowing
costs attributable to the district, such costs will be levied upon the taxable net tax capacity of the City,
excluding that portion captured by the District. The City does not anticipate issuing bonds in conjunction with
this project.
3.The amount of tax increments over the life of the district that would be attributable to school district levies,
assuming the school district’s share of the total local tax rate for all taxing jurisdictions remained the same, is
estimated to be $595,203.
4.The amount of tax increments over the life of the district that would be attributable to county levies,
assuming the county’s share of the total local tax rate for all taxing jurisdictions remained the same is
estimated to be $612,645.
5.No additional information has been requested by the county or school district that would enable it to
determine additional costs that will accrue to it due to the development proposed for the district.
Section V Prior Planned Improvements
The Authority shall accompany its request for certification to the County Auditor (or notice of district enlargement),
with a listing of all properties within the TIF District for which building permits have been issued during the 18 months
SPRINGSTED
Page 12
City of Shakopee and Shakopee Economic Development Authority, Minnesota
immediately preceding approval of the TIF Plan. The County Auditor shall increase the original net tax capacity of the
TIF District by the net tax capacity of each improvement for which a building permit was issued.
There have been no building permits issued in the last 18 months in conjunction with any of the properties within the
TIF District.
Section W Development Agreements
If within a project containing an economic development district, more than 10% of the acreage of the property to be
acquired by the Authority is purchased with tax increment bonds proceeds (to which tax increment from the property
is pledged), then prior to such acquisition, the Authority must enter into an agreement for the development of the
property. Such agreement must provide recourse for the Authority should the development not be completed.
The Authority anticipates entering into an agreement for development, but does not anticipate acquiring any property
located within the TIF District other than for road or utility purposes.
Section X Assessment Agreements
The Authority may, upon entering into a development agreement, also enter into an assessment agreement with any
person, which establishes a minimum market value of the land and improvements for each year during the life of the
TIF District.
The assessment agreement shall be presented to the County or City Assessor who shall review the plans and
specifications for the improvements to be constructed, review the market value previously assigned to the land, and
so long as the minimum market value contained in the assessment agreement appears to be an accurate estimate,
shall certify the assessment agreement as reasonable. The assessment agreement shall be filed for record in the
office of the County Recorder of each county where the property is located. Any modification or premature
termination of this agreement must first be approved by the City, County and School District.
The Authority does not anticipate entering into an assessment agreement.
Section Y Modifications of the Tax Increment Financing Plan
Any reduction or enlargement in the geographic area of the Project Area or the TIF District; increase in the amount of
bonded indebtedness to be incurred; increase in the amount of capitalized interest; increase in that portion of the
captured net tax capacity to be retained by the City; increase in the total estimated capital and administrative costs; or
designation of additional property to be acquired by the Authority shall be approved only after satisfying all the
necessary requirements for approval of the original TIF Plan. This paragraph does not apply if:
(1) the only modification is elimination of parcels from the TIF District; and
(2) the current net tax capacity of the parcels eliminated equals or exceeds the net tax capacity of
those parcels in the TIF District's original net tax capacity, or the City agrees that the TIF District's
original net tax capacity will be reduced by no more than the current net tax capacity of the parcels
eliminated.
The Authority must notify the County Auditor of any modification that reduces or enlarges the geographic area of the
TIF District. The geographic area of the TIF District may be reduced but not enlarged after five years following the
date of certification.
SPRINGSTED
Page 13
City of Shakopee and Shakopee Economic Development Authority, Minnesota
Section Z Administration of the Tax Increment Financing Plan
Upon adoption of the TIF Plan, the Authority shall submit a copy of such plan to the Minnesota Department of
Revenue. The Authority shall also request that the County Auditor certify the original net tax capacity and net tax
capacity rate of the TIF District. To assist the County Auditor in this process, the City shall submit copies of the TIF
Plan, the resolution establishing the TIF District and adopting the TIF Plan, and a listing of any prior planned
improvements. The Authority shall also send the County Assessor any assessment agreement establishing the
minimum market value of land and improvements in the TIF District, and shall request that the County Assessor
review and certify this assessment agreement as reasonable.
The County shall distribute to the Authority the amount of tax increment as it becomes available. The amount of tax
increment in any year represents the applicable property taxes generated by the retained captured net tax capacity of
the TIF District. The amount of tax increment may change due to development anticipated by the TIF Plan, other
development, inflation of property values, or changes in property classification rates or formulas. In administering and
implementing the TIF Plan, the following actions should occur on an annual basis:
(1) prior to July 1, the Authority shall notify the County Assessor of any new development that has
occurred in the TIF District during the past year to insure that the new value will be recorded in a
timely manner.
(2) if the County Auditor receives the request for certification of a new TIF District, or for modification of
an existing TIF District, before July 1, the request shall be recognized in determining local tax rates
for the current and subsequent levy years. Requests received on or after July 1 shall be used to
determine local tax rates in subsequent years.
(3) each year the County Auditor shall certify the amount of the original net tax capacity of the TIF
District. The amount certified shall reflect any changes that occur as a result of the following:
(a) the value of property that changes from tax-exempt to taxable shall be added to the
original net tax capacity of the TIF District. The reverse shall also apply;
(b) the original net tax capacity may be modified by any approved enlargement or reduction of
the TIF District;
(c) if laws governing the classification of real property cause changes to the percentage of
estimated market value to be applied for property tax purposes, then the resulting increase
or decrease in net tax capacity shall be applied proportionately to the original net tax
capacity and the retained captured net tax capacity of the TIF District.
The County Auditor shall notify the Authority of all changes made to the original net tax capacity of the TIF District.
Section AA Filing TIF Plan, Financial Reporting and Disclosure Requirements
The Authority will file the TIF Plan, and any subsequent amendments thereto, with the Commissioner of Revenue and
the Office of the State Auditor pursuant to Minnesota Statutes, Section 469.175, subdivision 4A. The Authority will
comply with all reporting requirements for the TIF District under Minnesota Statutes, Section 469.175, subdivisions 5
and 6.
SPRINGSTED
Page 14
Page 15
Exhibit I
ct No. 16 Within River Valley Redevelopment Project No. 1
Map of Tax Increment Financing (Economic Development) Distri
SPRINGSTED
Exhibit II
Assumptions Report
City of Shakopee, Minnesota
Tax Increment Financing (Economic Development) District No. 16
Rahr Expansion Project
$14.325M EMV & 2% Inflation
Type of Tax Increment Financing DistrictEconomic Development
Maximum Duration of TIF District8 years from 1st increment
Projected Certification Request Date06/30/15
Decertification Date12/31/25 (9 Years of Increment)
2014/2015
Base Estimated Market Value$2,529,400
Original Net Tax Capacity$50,588
Assessment/Collection Year
2015/20162016/20172017/20182018/2019
Base Estimated Market Value$2,529,400$2,529,400$2,529,400$2,529,400
Estimated Increase in Value - New Construction08,120,10013,508,09014,428,840
Total Estimated Market Value2,529,40010,649,50016,037,49016,958,240
Total Net Tax Capacity$50,588$212,990$320,750$339,165
City of Shakopee39.092%
Scott County36.617%
ISD #72035.575%
Other5.166%
Local Tax Capacity Rate116.450%2014/2015
Fiscal Disparities Contribution From TIF District35.6468%
Administrative Retainage Percent (maximum = 10%)3.00%
Pooling Percent0.00%
BondsNote (Pay-As-You-Go)
Bond DatedNANote Dated06/30/15
Bond RateNANote Rate0.00%
Bond AmountNANote Amount$1,883,086
Project PV Date & Rate06/30/150.00%PV Amount$1,948,340
Notes
Calculation assumes no changes to future tax rates and class rates. Includes 2% market value inflator.
Construction schedule assumes construction commences in 2015 with 65% of the project
complete by December 31, 2015 for assess 2016 and taxes payable 2017. The project will be
100% completed in 2017, for assess 2018 and taxes payable 2019. Market value estimates provided
by the Scott County Assessor's office.
SPRINGSTED
Page 16
Exhibit III
SPRINGSTED
Page 17
Exhibit IV
SPRINGSTED
Exhibit V
Market Value Analysis Report
City of Shakopee, Minnesota
Tax Increment Financing (Economic Development) District No. 16
Rahr Expansion Project
$14.325M EMV & 2% Inflation
Assumptions
Present Value Date06/30/15
P.V. Rate - Gross T.I.0.00%
Increase in EMV With TIF District$16,568,332
Less: P.V of Gross Tax Increment1,948,340
Subtotal$14,619,992
Less: Increase in EMV Without TIF0
Difference$14,619,992
AnnualPresent
Gross TaxValue @
Year Increment0.00%
12017121,703121,703
22018202,457202,457
32019216,258216,258
42020221,341221,341
52021226,525226,525
62022231,814231,814
72023237,208237,208
82024242,711242,711
92025248,323248,323
$1,948,340$1,948,340
SPRINGSTED
Page 18
Exhibit VI
Projected Pay-As-You-Go Note Report
City of Shakopee, Minnesota
Tax Increment Financing (Economic Development) District No. 16
Rahr Expansion Projec
t
$14.325M EMV & 2% Inflation
Note Date:06/30/15
Note Rate:0.00%
Amount:$1,883,086
CumulativeUnpaidSemi-AnnualLoan
Interest AccruedNetBalance
DatePrincipalInterestP & IDueInterestRevenueOutstanding
(1)(2)(3)(4)(5)(6)(7)(8)
1,883,086.00
02/01/160.000.000.000.000.000.001,883,086.00
08/01/160.000.000.000.000.000.001,883,086.00
02/01/170.000.000.000.000.000.001,883,086.00
08/01/1758,813.500.0058,813.500.000.0058,813.501,824,272.50
02/01/1858,813.500.0058,813.500.000.0058,813.501,765,459.00
08/01/1897,838.000.0097,838.000.000.0097,838.001,667,621.00
02/01/1997,838.000.0097,838.000.000.0097,838.001,569,783.00
08/01/19104,507.500.00104,507.500.000.00104,507.501,465,275.50
02/01/20104,507.500.00104,507.500.000.00104,507.501,360,768.00
08/01/20106,964.000.00106,964.000.000.00106,964.001,253,804.00
02/01/21106,964.000.00106,964.000.000.00106,964.001,146,840.00
08/01/21109,469.500.00109,469.500.000.00109,469.501,037,370.50
02/01/22109,469.500.00109,469.500.000.00109,469.50927,901.00
08/01/22112,025.000.00112,025.000.000.00112,025.00815,876.00
02/01/23112,025.000.00112,025.000.000.00112,025.00703,851.00
08/01/23114,631.500.00114,631.500.000.00114,631.50589,219.50
02/01/24114,631.500.00114,631.500.000.00114,631.50474,588.00
08/01/24117,291.000.00117,291.000.000.00117,291.00357,297.00
02/01/25117,291.000.00117,291.000.000.00117,291.00240,006.00
08/01/25120,003.000.00120,003.000.000.00120,003.00120,003.00
02/01/26120,003.000.00120,003.000.000.00120,003.000.00
$1,883,086$0.00$1,883,086.00$0.00$1,883,086.00
Surplus Tax Increment 0.00
Total Net Revenue $1,883,086.00
SPRINGSTED
Page 19
Springsted Incorporated
380 Jackson Street, Suite 300
Saint Paul, MN 55101-2887
Tel: 651-223-3000
Fax: 651-223-3002
www.springsted.com
MEMORANDUM
TO: Mayor and City Council
Kris Wilson, Acting City Administrator
FROM: Paul Steinman, Vice President
DATE: March 26, 2015
SUBJECT: Shakopee Community Facility Financing Options
The purpose of this memo is to provide an overview of options for the City to finance a variety of facilities being
discussed at present including an ice sheet, pool and playground and possibly other community recreation type
facilities. We have been asked to describe various funding options that would enable the City to finance the capital
costs of such facilities. This memo does not address how to pay the operating costs associated with the facilities.
From our initial discussions we assume any new facilities would be ineligible for Capital Improvement Bonds because
the improvements are for facilities unrelated to a “city hall, town hall, library, public safety facility, and public works
facility” (as per the MN Statutes 475.521).
In relation to financing options we will profile the various statutory authorities for Shakopee and the related debt
repayment revenue sources. As each option has its own set of advantages and disadvantages, we will also address
the financial characteristics of each option. These characteristics can become criteria for the City in evaluating the
distinctions among the options and are detailed in a table in this report and generally summarized as follows:
General obligation security requirement
Complexity, ease of access, authorization and procedural steps to access funding option
Impact on general obligation credit rating
Impact on net debt limit (3% of taxable market value)
3% X City’s Pay 14 taxable market value of $3,206,518,700 = $96,195,561
o
$96,195,561 minus outstanding bonds applicable to net debt limit, as of 3/25/15, of $4,175,000
o
Total net debt limit remaining: $92,620,561
o
Impact on any statutory debt limits or other legally restricted capacities
Interest rate and overall cost of capital
Statutory maximum term
General market limitations
City of Shakopee
Community Facilities Financing Memo
March 26, 2015
The City is also interested in understanding the repayment requirements of a financing scenario using 2 different
credit criteria: a) General Obligation bonds, and b) Lease Revenue bonds, summarized as follows:
Principal amount of bonds: $20M
Term of issuance: 20 years
Today’s rates plus 50 basis points (1/2%)
General Obligation (GO) bonds are bonds that are secured by the City’s full faith and credit. The City’s current
General Obligation bond rating by Moody’s is Aa2. The GO provides maximum security to bondholders and
therefore results in the lowest interest cost tax exempt bond financing available to the City. A Lease-Revenue bond
is not a General Obligation bond. As described below, it would carry a rating generally 1 notch below the Aa2 rating,
or Aa3. The impact of the different ratings on the interest rate can be seen in the following example.
GO Bond, 3%, 20 year: $1,344,000 approximate annual debt service
Lease Rev, 4%, 20 year: $1,471,000 approximate annual debt service
I would strongly caution you to avoid becoming focused on these dollar amounts. Multiple varying factors in the bond
market, project scope, timing, term, etc., can, and likely will, have significant impacts on these numbers. The
purpose of the number at this stage is to provide only a general ballpark estimate as to debt service and potential
levy amount.
Financing Options
A) General Obligation Referendum Bonds. A City has maximum flexibility to finance most capital projects, including
community recreation facilities, upon the successful passage of a voter referendum.
B) General Obligation Tax Abatement Bonds. The City would be able to finance the project with General Obligation
Tax Abatement Bonds to the extent the total annual debt service of all approved abatements does not exceed
$4,581,206, which is 10% of the City’s pay 2015 net tax capacity of $45,812,061. The City currently has the following
annual abatement estimates:
Ryan/Dean Lakes $79,107
Rosemount/Emerson/ADC Building $62,301
Datacard $34,047
Shutterfly $81,794
Trystar $23,968
Total Projected Abatements 2016 $281,217
Subtracting these abatements from your statutory maximum, the City has remaining approximately $4,299,989 in
annual tax abatement authority. Using the GO example above, $1,344,000 in annual debt service, you would still
have remaining tax abatement capacity of approximately $2,955,989.
2
City of Shakopee
Community Facilities Financing Memo
March 26, 2015
In tax abatement, each taxing authority considers whether or not to participate in the abatement with its share of the
tax dollar and subsequently a tax abatement levy. If the County or School District provide written denial of
participation in the abatement (or fail to respond within 90 days of a request to participate) the maximum term is 20
years. Participatory denial would be expected as other entities participation in tax abatement for the community
facilities projects currently being discussed is not anticipated.
Tax Abatement includes the identification of parcels with a “nexus” to the community facilities being proposed, whose
tax capacity times the City tax rate is at least equal to the principal amount of annual debt service payments on the
proposed Tax Abatement bond. This is simply a statutorily defined calculation, it has no exceptional impact on any
specific parcels within the City, identified or not. The Tax Abatement statute also requires a public hearing be held
prior to bonds being sold under this authority. It is important to remember that Tax Abatement is not a new source of
revenue and that in order to receive the Tax Abatement, the City must annually levy such Tax Abatement. The
annual Tax Abatement levy has the same impact of a general fund or debt service levy in that it is spread equally
across all property tax payers in the City. Simply put, the benefit of using Tax Abatement in this overall context is to
provide a mechanism to finance the capital costs of the community facilities projects being currently discussed.
The dollar impact of a tax abatement levy for debt service (GO example above, $1,344,000/annual) for varying
classifications of property using the City’s most recently available Pay 2015 tax capacity information is included as
Appendix I to this memo. This is the Tax Abatement levy impact only, not including any additional levy impact for
operational costs of the facilities, and not accounting for any other increases or decreases in your levy in a given
year. Additional growth in tax base would reduce the projected impact and alternately, declines in the City’s tax base
would increase such impact.
C) Lease Revenue Bonds. The City has authority through its EDA to issue lease revenue bonds to finance the
community facilities. The EDA would finance, construct and own the facilities and subsequently lease such facilities
to the City in the amount of the debt service payments on the bonds. Lease revenue bonds are not secured by a
General Obligation pledge of the entity in that no long term legal commitment to levy general property taxes exists.
Lease revenue bonds are secured by an annualized decision by the City Council to appropriate (levy) dollars to pay
the lease with the EDA. The risk of non-appropriation causes such bonds to be of less credit quality as compared to
general obligation bonds. Lease revenue bonds can have market access issues if the asset being financed is of a
non-essential nature to the entity’s basic public service program.
D) Sales Tax Revenue Bonds. The City could, after gaining approval for a sales tax through the procedures outlined
in statute, including special legislation and a referendum, capitalize future sales tax revenues to finance the
community facilities. Sales tax revenue bonds require both financial and legal covenants and financial performance
standards to be marketable. The potential exists that the sales tax revenue bonds also have a general obligation
backing. Additional detailed research on the potential success of this option will need to be conducted as it depends
upon a number of varying factors. Other cities including Bemidji, Mankato, New Ulm, St. Paul, Worthington,
Hennepin County, Cook County and North Mankato have successfully executed sales tax revenue bonds for a
variety of purposes, some of them recreational in nature.
3
City of Shakopee
Community Facilities Financing Memo
March 26, 2015
E) Internal Loan. To the extent the City has available funds internally, it can choose to loan such funds to finance the
project. In discussions with bond counsel at Kennedy & Graven, there is no statute that actually allows interfund
loans outside of the Tax Increment Financing context. However, the state auditor has published a position paper that
states interfund loans are a reasonable tool as long as they are “temporary” in nature and if the City is borrowing from
an enterprise fund that the money definitely be returned. Bond counsel has interpreted “temporary” to mean no
longer than 10 years. There is no rule of thumb/statutory requirement on interest – bond counsel has suggested
using a reasonable estimate equivalent to what the City would actually get when investing, up to the annual Tax
Increment maximum interest rate (currently 4%). To provide some general idea of rates, present investment rates at
the 4M Fund (through the League of MN Cities) are 2.2% for a 5 year Certificate of Deposit. A 10-year investment
period would yield slightly higher than 2.2%
F) Recreational Facility Revenue Bonds. 1) The City could finance the facilities using lease revenue bonds if the
project is leased to a nonprofit corporation. This option requires payment of rent by the nonprofit sufficient to service
debt on the bonds issued to finance the facilities. 2) The City could also issue gross revenue bonds secured by a
pledge of gross revenues of the facilities financed. If gross revenue bonds are issued, such revenues are required to
cover debt service on the bonds and subsequently the City may levy taxes to pay for any deficiency in revenues
needed to pay operating and maintenance costs.
4
City of Shakopee
Community Facilities Financing Memo
March 26, 2015
Type of GeneralInterestImpact on CountOtherComplexityStatutory Max General
FinancingObligationRate and City Credit againstStatutoryTermMarket
PledgeOverallRating DebtLimitsLimitations
Cost Limit?
GeneralYes Lowest Full Yes Voter Low except 30 Years None
Obligation Approval for
(Referendum) referendum
Bonds
TaxYes Lowest Full YesPublicLow 20 years if one None
Abatement Hearing entity denies
Bonds participation
Lease-No Moderate (1 Full Over $1 No High, similar None, except Generally no
Revenue notch below million to a real marketability but size/term
Bonds GO rating) applicable, estate suggests lease considerations
Bondtransaction commensurate
Counsel?EDA/City with term
Sales Tax Dependent on Lowest or Full No Special Medium-high 30 years Potential
Revenue authorization moderate Legislation market
Bonds depending and limitations on
on form Referendum size/term
Internal Loan N/A Lowest Partial No Yes Low 10 Years None
Recreation No Higher Full No No Higher 30 Years Market
Bonds limitations if
insufficient
debt service
coverage
Conclusion
The City has a number of potential financing tools, many having the highest potential credit quality, hence lowest
interest rate. Many project and public policy items exist for final resolution. Either as part of that resolution process or
at its conclusion we can assist the City in matching these outcomes with the most advantageous financing options.
5
City of Shakopee
Community Facilities Financing Memo
March 26, 2015
Appendix I
Shakopee, Minnesota
Annual Tax Impact - Based on Net Tax Capacity
Levy Amount$1,344,000
Estimated2014/2015TNTC (Pay 2015)$38,705,002
MarketNet Tax
Value (a)CapacityTax Rate Increase (b):3.472%
Homestead Residential
$50,000$300$10
85,00055419
125,00099034
200,0001,80863
250,0002,35382
300,0002,898101
350,0003,443120
400,0003,988138
450,0004,500156
500,0005,000174
550,0005,625195
650,0006,875239
750,0008,125282
850,0009,375326
950,00010,625369
1,000,00011,250391
Commercial/Industrial
$100,000$1,500$52
150,0002,25078
250,0004,250148
500,0009,250321
1,000,00019,250668
3,000,00059,2502,057
5,000,00099,2503,446
7,000,000139,2504,835
10,000,000199,2506,919
Apartments (4 or More Units)
$50,000$625$22
100,0001,25043
1,000,00012,500434
3,000,00037,5001,302
7,000,00087,5003,038
Seasonal/Recreational (Residential)
$30,000$300$10
40,00040014
45,00045016
50,00050017
75,00075026
Agricultural Homestead
Value per Acre$5,000
Dwelling Est.Net Tax
Market (c)AcresTotal EMV (d)Capacity
$100,00080$500,000$2,718$94
160900,0004,718164
3201,700,00010,668370
6403,300,00026,668926
Agricultural Non-Homestead
Net Tax
AcresTotal EMV (d)Capacity
80$400,000$4,000$139
160800,0008,000278
3201,600,00016,000556
6403,200,00032,0001,111
(a) Estimated market value is the basis from which the net tax capacity is calculated.
This value is not necessarily the price the property would bring if sold.
(b) The tax rate increase is derived by dividing the average debt service by the taxable net tax
capacity. The dollar increase in taxes payable is derived by multiplying the net tax capacity
by the tax capacity rate increase.
(c) Includes house, garage and one acre with an estimated market value of $100,000.00
(d) Estimated value per tillable acre is $5,000.00
Note: Changes in interest rates, timing or size of the bond issue may cause significant
alterations of this information.
6